Senator Bernie Sanders (I-Vt) and Congresswoman Alexandria Ocasio-Cortez (D-NY) have jointly proposed a new federal law that would limit the interest rates that consumer lenders or credit card issuers may charge: setting a cap at 15%. This is in response to what both Sanders and AOC see as a crisis of consumer indebtedness.
The bill would have considerable bite for the lending industry. At present the average rate on credit cards is above 17%.
Other provisions of the bill would allow the Federal Reserve to make exceptions to the cap, thus permitting borrowing above 15%, but only if necessary to keep institutions afloat, and even then only with the proviso that any such exception lapses after 18 months.
“This is a moral issue,” Sanders said. “Every major religion on earth has condemned usury.”
The Thing to Know:
Sanders is seeking the Democratic Party’s nomination for President. AOC has become very prominent in some circles in that party since her June 2018 defeat of Joe Crowley, a member of the Democratic Party’s House leadership, in the primary for the seat she now holds. For Sanders to propose this bill in tandem with AOC will associate the two, and will perhaps increase Sanders’ credibility with AOC’s admirers.